Mortgages – The Israeli System (Part 2)

As I have mentioned before, working your way through the mortgage maze is not a simple matter.  It’s all too easy to get lost in the system and there is a lot of paperwork and running around to do.  It is also difficult to decide on which mortgage is the right one for you.

The mortgage banks in Israel offer many different types of mortgages.  There are mortgages linked to different types of interest rates such as the Israeli prime, labor etc.  There are mortgages linked to foreign currency.  There are mortgages with variable interest rates and fixed interest rates.  On top of all that there are different ways of calculating the repayment of the mortgage that have an effect on the type of mortgage you take.  You can arrange repayment over 10, 15, 20, 25 or 30 years.

All these options affect the cost of the mortgage you take out.

Most people don’t understand how all this works.  They go into a mortgage bank (usually the bank where they have their checking account) and go through the process with the mortgage bank attached to that bank.  Some people shop around.  They go into several banks and get a quote on the interest rates and then pick the bank that seems to give them the lowest rate.

However, picking the right mortgage bank and the right mortgage is not only a matter of who gives the lowest interest rates.  When picking the best mortgage you have to take into consideration the interest rate as well as the way the repayment is calculated, the length of the repayment and your own individual economic situation.

People who do not have enough of an understanding of how to calculate the best mortgage for them but want to save money on the mortgage in the long run use the services of a mortgage broker or consultant.  These professionals go to the banks for you and negotiate the best deal while trying to take into account all the variables that influence your mortgage and its repayment.